Update 3/14/18 - Don't panic! Read on:
It's just not possible to repair SPWF to the grandeur that the community justly expects in 6 weeks. That said, we have found someone who has stepped forward to run a smaller-scale event on those days so that the Steampunk community has an entertaining, fun, and casual event to attend. We, SPS, are in the midst of planning a new large-scale event for a future date that will be able to be held up to the lofty standards of SPWF. Communication has been spotty and we apologize for that. Here is the TL;DR:

There will be a smaller-scale event held on May 4 - 6, 2018. It will be smaller scale and details are being fleshed out - expect a plan to be announced within 72 hours.

SPS is planning a new event for the future, tentatively the fall, that will be better organized and better planned than what we could have done in 6 weeks or less.

We would love your help, advice, and input on both of these events to make sure that you, the community, are happy with them. We admit that SPWF was too much for us to take on this quickly - and we are asking for your help to bring it back as much as we can for the future.

According to our source, the convention has not cancelled its contracts with the venues or it would face a large cancellation fee. The hotels themselves are not going to break the contract, which means that nothing else can be booked into that space. Because of this, Steampunk World's Faire still is still financially responsible for the space and is planning to have a small event in order to encourage people not to cancel hotel rooms. The more rooms are cancelled, the larger bill they will receive due to not filling the hotel block in the contracts.

The source also states that the sales departments of the convention hotels have confirmed that attendees only have 72 hours to cancel their reservations or the single-night deposit for their rooms will be charged.

Anyone with a room booked may wish to cancel now in order to avoid losing their deposit. If, for some reason, you want to re-book at a later date, there's an excellent chance that there will be plenty of rooms available.